Technical Tax Amendments Act, 2012 (S.C. 2013, c. 34)
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Assented to 2013-06-26
PART 5OTHER AMENDMENTS TO THE INCOME TAX ACT AND RELATED LEGISLATION
R.S., c. 1 (5th Supp.)Income Tax Act
359. (1) Subsection 249(1) of the Act is replaced by the following:
Definition of “taxation year”
249. (1) In this Act, except as expressly otherwise provided, a “taxation year” is
(a) in the case of a corporation or Canadian resident partnership, a fiscal period;
(b) in the case of an individual (other than a testamentary trust), a calendar year; and
(c) in the case of a testamentary trust, the period for which the accounts of the trust are made up for purposes of assessment under this Act.
Marginal note:References to calendar year
(1.1) When a taxation year is referred to by reference to a calendar year, the reference is to the taxation year or taxation years that coincide with, or that end in, that calendar year.
(2) Subsection 249(3) of the Act is replaced by the following:
Marginal note:Fiscal period exceeding 365 days
(3) If a fiscal period of a corporation exceeds 365 days and for that reason the corporation does not have a taxation year that ends in a particular calendar year, for the purposes of this Act,
(a) the corporation’s first taxation year that would otherwise end in the immediately following calendar year is deemed to end on the last day of the particular calendar year and its next taxation year is deemed to commence on the first day of the immediately following calendar year; and
(b) the corporation’s first fiscal period that would otherwise end in the immediately following calendar year is deemed to end on the last day of the particular calendar year and its next fiscal period is deemed to commence on the first day of the immediately following calendar year.
(3) Section 249 of the Act is amended by adding the following after subsection (4):
Marginal note:Testamentary trusts
(5) The period for which the accounts of a testamentary trust are made up for the purposes of an assessment under this Act may not exceed 12 months, and no change in the time when such a period ends may be made for the purposes of this Act without the concurrence of the Minister.
Marginal note:Loss of testamentary trust status
(6) If at a particular time after December 20, 2002 a transaction or event, described in any of paragraphs (b) to (d) of the definition “testamentary trust” in subsection 108(1), occurs and as a result of that occurrence a trust or estate is not a testamentary trust, the following rules apply:
(a) the fiscal period for a business or property of the trust or estate that would, if this Act were read without reference to this subsection and those paragraphs, have included the particular time is deemed to have ended immediately before the particular time;
(b) the taxation year of the trust or estate that would, if this Act were read without reference to this subsection and those paragraphs, have included the particular time is deemed to have ended immediately before the particular time;
(c) a new taxation year of the trust or estate is deemed to have started at the particular time; and
(d) in determining the fiscal period for a business or property of the trust or estate after the particular time, the trust or estate is deemed not to have established a fiscal period before that time.
(4) Subsection (1) and subsection 249(5) of the Act, as enacted by subsection (3), are deemed to have come into force on December 21, 2002, except that paragraph 249(1)(a) of the Act, as enacted by subsection (1), is to be read before October 31, 2006 without reference to “or Canadian resident partnership”.
(5) Subsection (2) applies to the 2012 and subsequent taxation years.
(6) Subsection 249(6) of the Act, as enacted by subsection (3), is deemed to have come into force on July 19, 2005 and, if a trust or estate so elects in writing by filing the election with the Minister of National Revenue on or before its filing-due date for its taxation year in which this Act receives royal assent, it also applies to that trust or estate, as the case may be, after December 20, 2002.
(7) Subsection (8) applies to a trust or estate (referred to in this subsection and subsection (8) as the “trust”) for a particular taxation year of the trust that ends in the period that begins on December 21, 2002 and ends on October 24, 2012 (in this subsection referred to as the “relevant period”), if
(a) the particular taxation year would have — if paragraph (d) of the definition “testamentary trust”, as contained in section 100 of Bill C-10 of the second session of the 39th Parliament as passed by the House of Commons on October 29, 2007, had applied to the particular taxation year — been deemed by paragraph 249(6)(b) of the Act, as enacted by subsection (3), to have ended on a day (in subsection (8) referred to as the “deemed year-end day”) in the relevant period; and
(b) the trust filed, before October 24, 2012, a return of income for the particular taxation year.
(8) If this subsection applies to a trust for a particular taxation year, for purposes of the Act
(a) the particular taxation year is deemed to have ended on the deemed year-end day and not at any other time;
(b) the trust is deemed to be an inter vivos trust for the purpose of determining each of the trust’s taxation years that ends
(i) after the particular taxation year and in the relevant period, and
(ii) unless the trust elects under paragraph (c), after October 24, 2012; and
(c) if the trust so elects — by filing an election in writing with the Minister of National Revenue on or before its filing-due date for its taxation year in which this Act receives royal assent — for each of the trust’s taxation years that ends after October 24, 2012, the period for which the accounts of the trust are made up for purposes of assessment under the Act is deemed to be the period for which the accounts of the trust were made up for purposes of the Act for the trust’s last taxation year that ended before the particular taxation year.
360. (1) The portion of paragraph 249.1(1)(b) of the Act after subparagraph (iii) is replaced by the following:
after the end of the calendar year in which the period began unless, in the case of a business, the business is not carried on in Canada,
(2) Paragraph 249.1(9)(b) of the French version of the Act is replaced by the following:
b) la date donnée est antérieure au 22 mars 2012;
(3) Subsection (1) applies to fiscal periods that begin after the day on which this Act receives royal assent.
(4) Subsection (2) applies to fiscal periods that end in or after 2011.
361. (1) Paragraph 251(1)(c) of the Act is replaced by the following:
(c) in any other case, it is a question of fact whether persons not related to each other are, at a particular time, dealing with each other at arm’s length.
(2) Subsection (1) is deemed to have come into force on December 24, 1998.
362. (1) Subsection 252(3) of the Act is amended by replacing “subparagraph 210(c)(ii) and subsections 248(22) and (23)” with “and subsections 210(1) and 248(22) and (23)”.
(2) Subsection (1) applies to the 1996 and subsequent taxation years.
363. (1) Section 253.1 of the Act is replaced by the following:
Marginal note:Investments in limited partnerships
253.1 For the purposes of subparagraph 108(2)(b)(ii), paragraphs 130.1(6)(b), 131(8)(b), 132(6)(b) and 146.1(2.1)(c), subsection 146.2(6), paragraphs 146.4(5)(b) and 149(1)(o.2), the definition “private holding corporation” in subsection 191(1) and regulations made for the purposes of paragraphs 149(1)(o.3) and (o.4), if a trust or corporation holds an interest as a member of a partnership and, by operation of any law governing the arrangement in respect of the partnership, the liability of the member as a member of the partnership is limited, the member shall not, solely because of its acquisition and holding of that interest, be considered to carry on any business or other activity of the partnership.
(2) Subsection (1) is deemed to have come into force on January 1, 1998, except that
(a) for taxation years that end after December 16, 1999 and before 2003, section 253.1 of the Act, as enacted by subsection (1), is to be read as follows:
253.1 For the purposes of subparagraph 108(2)(b)(ii), paragraphs 130.1(6)(b), 131(8)(b), 132(6)(b), 146.1(2.1)(c) and 149(1)(o.2), the definition “private holding corporation” in subsection 191(1) and regulations made for the purposes of paragraphs 149(1)(o.3) and (o.4), if a trust or corporation is a member of a partnership and, by operation of any law governing the arrangement in respect of the partnership, the liability of the member as a member of the partnership is limited, the member is deemed
(a) to undertake an investing of its funds because of its acquisition and holding of its interest as a member of the partnership; and
(b) not to carry on any business or other activity of the partnership.
(b) for taxation years that end after 2002 and before 2008, section 253.1 of the Act, as enacted by subsection (1), is to be read without reference to “146.4(5)(b)”; and
(c) for taxation years that end after 2002 and before 2009, section 253.1 of the Act, as enacted by subsection (1), is to be read without reference to “subsection 146.2(6), paragraphs”.
364. (1) Subparagraph 256(6)(b)(ii) of the French version of the Act is replaced by the following:
(ii) soit à des actions du capital-actions de la société contrôlée qui appartenaient à l’entité dominante au moment donné et qui, selon la convention ou l’arrangement, devaient être rachetées par la société contrôlée ou achetées par la personne ou le groupe de personnes visé au sous-alinéa a)(ii).
(2) Subparagraph 256(7)(a)(i) of the Act is amended by striking out “or” at the end of clause (C) and by adding the following after clause (D):
(E) a corporation on a distribution (within the meaning assigned by subsection 55(1)) by a specified corporation (within the meaning assigned by that subsection) if a dividend, to which subsection 55(2) does not apply because of paragraph 55(3)(b), is received in the course of the reorganization in which the distribution occurs,
(3) Paragraph 256(7)(a) of the Act is amended by adding “or” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):
(iii) the acquisition at any time of shares of the particular corporation if
(A) the acquisition of those shares would otherwise result in the acquisition of control of the particular corporation at that time by a related group of persons, and
(B) each member of each group of persons that controls the particular corporation at that time was related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the particular corporation immediately before that time;
(4) Subsection 256(7) of the Act is amended by adding the following after paragraph (c):
(c.1) subject to paragraph (a), if, at any particular time, as part of a series of transactions or events, two or more persons acquire shares of a corporation (in this paragraph referred to as the “acquiring corporation”) in exchange for or upon a redemption or surrender of interests in, or as a consequence of a distribution from, a SIFT trust (determined without reference to subsection 122.1(2)), SIFT partnership (determined without reference to subsection 197(8)) or real estate investment trust (as defined in subsection 122.1(1)), control of the acquiring corporation and of each corporation controlled by it immediately before the particular time is deemed to have been acquired by a person or group of persons at the particular time unless
(i) in respect of each of the corporations, a person (in this subparagraph referred to as a “relevant person”) affiliated (within the meaning assigned by section 251.1 read without reference to the definition “controlled” in subsection 251.1(3)) with the SIFT trust, SIFT partnership or real estate investment trust owned shares of the particular corporation having a total fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the particular corporation at all times during the period that
(A) begins on the latest of July 14, 2008, the date the particular corporation came into existence and the time of the last acquisition of control, if any, of the particular corporation by a relevant person, and
(B) ends immediately before the particular time,
(ii) if all the securities (in this subparagraph as defined in subsection 122.1(1)) of the acquiring corporation that were acquired as part of the series of transactions or events at or before the particular time were acquired by one person, the person would
(A) not at the particular time control the acquiring corporation, and
(B) have at the particular time acquired securities of the acquiring corporation having a fair market value of not more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation, or
(iii) this paragraph previously applied to deem an acquisition of control of the acquiring corporation upon an acquisition of shares that was part of the same series of transactions or events;
(5) Paragraph 256(7)(e) of the Act is replaced by the following:
(e) control of a particular corporation and of each corporation controlled by it immediately before a particular time is deemed not to have been acquired at the particular time by a corporation (in this paragraph referred to as the “acquiring corporation”) if at the particular time, the acquiring corporation acquires shares of the particular corporation’s capital stock for consideration that consists solely of shares of the acquiring corporation’s capital stock, and if
(i) immediately after the particular time
(A) the acquiring corporation owns all the shares of each class of the particular corporation’s capital stock (determined without reference to shares of a specified class, within the meaning assigned by paragraph 88(1)(c.8)),
(B) the acquiring corporation is not controlled by any person or group of persons, and
(C) the fair market value of the shares of the particular corporation’s capital stock that are owned by the acquiring corporation is not less than 95% of the fair market value of all of the assets of the acquiring corporation, or
(ii) any of clauses (i)(A) to (C) do not apply and the acquisition occurs as part of a plan of arrangement that, on completion, results in
(A) the acquiring corporation (or a new corporation that is formed on an amalgamation of the acquiring corporation and a subsidiary wholly-owned corporation of the acquiring corporation) owning all the shares of each class of the particular corporation’s capital stock (determined without reference to shares of a specified class, within the meaning assigned by paragraph 88(1)(c.8)),
(B) the acquiring corporation (or the new corporation) not being controlled by any person or group of persons, and
(C) the fair market value of the shares of the particular corporation’s capital stock that are owned by the acquiring corporation (or the new corporation) being not less than 95% of the fair market value of all of the assets of the acquiring corporation (or the new corporation);
(6) Subsection 256(7) of the Act is amended by adding “and” at the end of paragraph (f) and by adding the following after that paragraph:
(g) a corporation (in this paragraph referred to as the “acquiring corporation”) that acquires shares of another corporation on a distribution that is a SIFT trust wind-up event of a SIFT wind-up entity is deemed not to acquire control of the other corporation because of that acquisition if the following conditions are met:
(i) the SIFT wind-up entity is a trust whose only beneficiary immediately before the distribution is the acquiring corporation,
(ii) the SIFT wind-up entity controlled the other corporation immediately before the distribution,
(iii) as part of a series of transactions or events under which the acquiring corporation became the only beneficiary under the trust, two or more persons acquired shares in the acquiring corporation in exchange for their interests as beneficiaries under the trust, and
(iv) if all the shares described in subparagraph (iii) had been acquired by one person, the person would
(A) control the acquiring corporation, and
(B) have acquired shares of the acquiring corporation having a fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation.
(7) Subsections (2) and (3) apply to acquisitions of shares that occur after 2000.
(8) Subsections (4) and (6) apply to transactions undertaken after 4:00 p.m. Eastern Standard Time March 4, 2010, other than transactions the parties to which are obligated to complete pursuant to the terms of an agreement in writing between the parties entered into before that time. However, the parties to a transaction shall be considered not to be obligated to complete the transaction if one or more of those parties may be excused from completing the transaction as a result of amendments to the Act.
(9) Subsections (4) and (6) also apply to transactions completed or agreed to in writing in the period that begins on July 14, 2008 and ends at 4:00 pm Eastern Standard Time March 4, 2010 if the parties to the transactions jointly elect in writing to the Minister of National Revenue on or before
(a) if a party to the transactions is a partnership, the day that is the later of
(i) the day that is the latest on which a return is required by section 229 of the Income Tax Regulations to be filed in respect of the partnership’s fiscal period that includes the day on which this Act receives royal assent, and
(ii) the day that is the latest filing-due date of any party for its taxation year that includes the day on which this Act receives royal assent, and
(b) if none of the parties to the transaction is a partnership, the day that is the latest filing-due date of any party for its taxation year that includes the day on which this Act receives royal assent.
For the purposes of this subsection, the parties shall be considered to be the relevant SIFT trust, SIFT partnership, real estate investment trust and acquiring corporation described in paragraph 256(7)(c.1) or (g) of the Act, as the case may be.
(10) Subsection (5) applies in respect of shares acquired after 1999.
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